The $190 billion attack on Nomad Bridge was just one of 13 separate thefts in 2022.
According to a new report, Cross-Chain Bridge hacks account for 69 percent of cryptocurrencies stolen in 2022. This means a loss of 2 billion dollars. The report came Tuesday from blockchain analysis firm Chainanalysis. The report emphasized that there were 13 Cross-Chain Bridge hacks this year. The last one was the $190 million Nomad Bridge theft.
The first quarter of 2022 was the quarter with the most cryptocurrencies stolen since 2021. With the Ronin Bridge attack that took place towards the end of March, $ 624 million worth of Ethereum (ETH) and USD Coin (USDC) were stolen.
Cross-Chain bridges, also known as blockchain bridges, are used to transfer cryptocurrencies from one blockchain network to another. Chainalysis explains that although the designs of bridges vary, users deposit their tokens into a chain-to-bridge protocol, which is then locked into a contract. Afterwards, the user is given the equivalent token in the other chain.
Weaknesses of Bridges
Blockchain bridges, according to the Chainalysis report:
Regardless of how assets are stored on blockchain bridges, be it a smart contract or a central custodian, storage becomes a target.
According to some experts, the development of effective blockchain bridges is still in its early stages. Some developers, on the other hand, understand relatively little about security protocols. Therefore, some bridges developed become vulnerable to attack by hackers.
Nomad founder James Prestwich tweeted on July 22:
We have not yet gained that much experience against attacks in Cross-Chain systems. People do not know what frequent attacks are, so they are not protected from attacks.
According to Chainalysis, although centralized exchanges were once a favorite of hackers, the success rates of these attacks have decreased with the developments in security protocols.
Blockchain analytics firm launches cryptocurrency services. The firm believes that the security of blockchain bridges should be developed as soon as possible:
A valuable first step towards addressing issues like this could be that rigorous code audits become DeFi’s gold standard for both those who create protocols and investors who evaluate them. Over time, the most powerful, secure, smart contracts can serve as templates for developers to create.
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